You are right, it is very hard to grasp what exactly is going on with your client. I would have interrogated more to find out details but keep in mind the focus of this forum is to assist members in questions and confusions related to the topics covered in the lessons. I dont mind discussing real scenarios as long as the topic of discussion is within the scope.
From what I see in your situation is that you have data of two line od businesses mixed together within one BSV. What you want to do is split one ledger (one BSV) into two. Looks like a daunting task. Easier of the two solutions seems to be fresh implementation+data migration (For both line of business) as oppose to cloning + removing the data for the other line of business. If you are going with option 2 then one way of doing the cleanup would be to pass adjustment entries to nullify the portion that belongs to the other line of business. These adjustment entries need to be go in all the previous months till the beginning of time.